|The Atlas Chronograph watch in 2009, one of the first watches created by Tiffany Watch Co. Ltd.|
Updated at 2 p.m. with a statement from Tiffany & Co. disputing the claims of the Swatch Group. See below.
In a terse statement Monday, the Swatch Group said it will end its partnership with Tiffany & Co. to make and distribute branded watches for the luxury jeweler and will seek compensation for the loss of business. The world’s largest watch group blames Tiffany for what it calls a “breach of contract.”
“Today Swatch Group terminated its cooperation contracts with Tiffany & Co,” the Biel/Bienne, Switzerland-based company said in a statement. “This action became necessary following Tiffany & Co’s systematic efforts to block and delay development of the business.”
In December 2007, with a great deal of fanfare, the two companies announced that it was creating Tiffany Watch Co. Ltd. The agreement, finalized in the spring of 2008, created an entity responsible for the development, production and distribution of Tiffany & Co. branded watches. Worldwide sales were handled through points of sale operated by Tiffany & Co., by The Swatch Group Ltd. and by independent retailers.
Tiffany Watch Co. Ltd. will wind down over the course of two years following the termination of the cooperation contracts, Swatch said in its statement, adding that it will seek damage claims.
“Swatch Group and Tiffany Watch Co. Ltd. will press claims for damages against Tiffany & Co., New York, in compensation for the loss of planned long-term future business.”
Tiffany issued a statement at about 11:30 a.m. disputing the claims of Swatch Group saying that the watch company failed to uphold its end of the agreement terms.
“Since Tiffany & Co. and The Swatch Group Ltd. entered upon this venture more than three years ago it has become increasingly clear that Swatch is unwilling to honor the terms of our agreement, make the necessary commitments and work cooperatively to develop the business for TIFFANY & CO. watches in the luxury space, Tiffany said in its statement.
“Despite assurances to contrary made in 2007, Swatch has failed to provide appropriate distribution for TIFFANY & CO. brand watches, with the result that our current business forecasts do not include any meaningful increase in watch sales or royalty income. Tiffany has honored its obligations under the agreement, and insisted that Swatch honor its own obligations, particularly its obligation to respect Tiffany's rights regarding brand-management and product design. Tiffany & Co. is confident that its position will be vindicated in the pending arbitral proceedings in relation to this matter and Swatch's misconduct.”